Your CIBIL score could play a key role in determining your eligibility for a loan. A CIBIL score is a credit rating assigned by the Credit Information Bureau (India) Limited (CIBIL). It is one of the important factors that is assessed when evaluating loan applications.
Here are some of the most frequently asked questions about the CIBIL score and its impact on loan approvals.
CIBIL Score FAQs
A CIBIL score, denoted by a three-digit number, reflects the borrower’s credit profile and a summary of their credit history. On the other hand, a CIBIL report is a compilation of all the credit-related activities of individuals/companies provided by CIBIL.
A CIBIL score acts as the first impression for your lender when you apply for a loan. Once you submit the loan application, your CIBIL score and report are assessed to decide on your application. The higher the score, the better your chances of being sanctioned for the loan.
The CIBIL score ranges from 300 to 900, with a score above 750 typically being ideal for smooth and quick Home Loan approval.
The major factors that affect your CIBIL score include payment history, mix of credit, credit utilisation ratio, and number of loan applications and enquiries, among others.
Clearing dues and other liabilities to improve your CIBIL score is a good strategy. However, it will take a few months for the improvement to reflect in the report.
A borrower can raise a dispute in the CIBIL report under the following circumstances:
- Duplicate account
- Inaccuracy in the payment history
- Inaccurate overdue
- Discrepancies in ownership (for example, in case a loan is wrongly tagged against your name)
You can check your CIBIL score by visiting the official website of CIBIL.
You can increase your CIBIL score for a loan by following these tips:
- Paying your dues on time
- Maintaining a healthy credit mix
- Applying for new credit only when necessary
- Keeping track of your guaranteed, co-signed, joint accounts every month
- Frequently reviewing the credit report
A credit score that falls within the range of 625 to 300 is considered low.
No, improving your credit score usually takes around six months to a year.
The highest possible credit score is 900, indicating the highest level of creditworthiness for a borrower.
Yes, you may be able to avail of a loan with a credit score of 650. However, you may not be able to secure a competitive interest rate or a higher loan amount.
A credit score is a numerical representation of an individual's creditworthiness. While ‘credit score’ is a general term, the ‘CIBIL score’ specifically refers to the score calculated by Credit Information Bureau (India) Limited or CIBIL.
Some of the factors that influence your CIBIL score are your payment history, the length of credit, credit utilisation ratio, credit mix and types, and the number of enquiries made.
A credit report is a detailed record of an individual's credit history, including personal information, credit accounts, and enquiries. A credit rating, on the other hand, is an assessment of the creditworthiness of a borrower in general terms that is represented by a score.
Your credit score is one of the criteria assessed by the lenders before finalising your loan application. A higher credit score can increase your chances of being approved for a sizeable loan quickly at a competitive interest rate.
Your CIBIL score is calculated based on the payment history, credit exposure, credit type and duration, and credit enquiries.
Having multiple credit cards can affect your credit score both positively and negatively. While it can increase your total available credit, it can also lead to higher debt if not managed properly. Additionally, note that each new application results in a hard enquiry and can lower your score.
No, checking your own credit score is considered a soft enquiry and does not affect your credit score. It is a good practice to regularly review your credit report to ensure accuracy.
Yes, late payments can significantly impact your credit score. Payments made past the due date are typically reported to credit bureaus and can lower your score.
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